FDI or CEE: Which path is our economy taking?

Publishing Date : 27 November, 2018

Author :

President Dr Mokgweetsi Masisi has not boldly declared the exact path his administration will pursue as far as economic development is concerned. The examination of his posture signal that he is a man who view Foreign Direct Investment (FDI) as the quickest way to solve the country’s economic woes.

For the past decade, owing largely to economic downturn and ill-conceived policies, Botswana’s economy has experienced a sluggish economy, which did not have any significant growth since then. In a case where there has been any growth, the growth has been jobless.
It is this reality, which has hastened everyone to agree that something must be done. But under what terms or path do we solve our economic woes? Masisi has been relentless ever since taking the presidency, travelling the world and promising investors abroad to set-up shop in Botswana, and that, unlike before, they will be well taken care of.

The reality of the matter is that, we need both FDI to create jobs and re-energize our economy. This can be achieved but there is compelling need to bring citizens on board, not just to have them as spectators in our new desired economic transformation. There will be an obvious discontent, no matter how Botswana’s FDI mission would be a success, if the citizens are side-lined and government tend to only extend olive branch to foreign owned companies.

Already, people are complaining of an economy, though small, dominated by foreign nationals, while the locals are watching on the side-lines. We need to ponder one question. Do we have an economy policy, or Citizen Economic Empowerment (CEE) designed specifically for the purpose of building locally owned corporations that can outgrow the current borders? If not, why are we still reluctant about doing it?

FDI and CEE can complement each other, provided government come up with a blue print that will guide the co-existence of the two. For instance, it good to bring a foreign-owned company to set-up in Botswana if it brings the technical know-how that the country lacks, and also brings in the capital needed to set-up a business that they are venturing in.

At the same, it is not necessary to bring a company that would come to set-up in Botswana, rely on government tenders, especially if there are many companies locally that can offer the same services. There has to the balance between the two, to avoid the situation where the two resent each other. Citizens want companies which can come to create jobs for them but certainly, they do not want to be side-lined by the same companies.

Looking at countries that succeed as in terms of economic development such as the United States, known as ‘the land of Immigrants’, the success hinges on the talents of people from outside. Today, they still value foreigners who bring skills to the economy, therefore offering them citizenship to bind them to their destiny. United Arab Emirates, Dubai, in particular, is one of the cities that have experienced phenomenal growth in terms of the economy. That success has been systematic- it is contribution of both the foreign investors and the government of UAE.

According to the World Migration Report, Dubai is the most cosmopolitan city in the world with 83 per cent of population foreign-born. Dubai is followed by Brussels with 62 per cent of its residents born in a foreign country. Among the other top ten cities are Toronto (46 percent), Auckland (39percent), Sydney (39 percent), Los Angeles (39 percent), Singapore (38percent), London (37 percent), New York (37 percent) and Melbourne (35 percent).

However, Botswana has a strict immigration policy to an extent that it rarely offers citizenship to foreigners, even those who have stayed in the country for a long time. One such strong critic of immigration policy, especially under Lt Gen Khama’s presidency was former President Festus Mogae, who called the policy regressive and detrimental to the country’s economic success. In 2014, Mogae launched a scathing attack on Khama’s administration approach when dealing with foreign nationals.

In 2016, it Public Accounts Committee (PAC) heard that Botswana only gives up 200 people citizenship on annual basis. There has been a concern that, Botswana is not an open economy like we say we are to the world. This is because there are people who have been doing business in Botswana for over 30 years and government rejected their application for citizenship over the period and all of a sudden they were told to go.

We are hoping Masisi administration will get things done, as he promised to transform the immigration system to make it an enabler in terms of economic growth. Dorcas Makgato, whom Masisi appointed Minister of Immigration, Gender and Nationality after ascending to the presidency has at the beginning of her role stated that she has been given a clear mandate by President Masisi to be at the forefront of the immigration system that will be an “enabler” for business instead of frustrating it, as it has been the case.

The immigration system was also emphasised by new Minister of Investment, Trade and Industry, Bogolo Kenewendo as an integral part of business reforms that will transform the ease of doing business in Botswana. But all in all, investors are cagey on government who is unpredictable. Some who are already doing business in Botswana are sceptical about expanding their business because their future in Botswana is uncertain. Investors need certainty and some level of predictability. But we should not worry about FDIs only. There is need to empower locals as well to be world class entrepreneurs and to build corporations that can drive Botswana’s economy.